"I understand they need a strong police and security apparatus, and we encourage that, but do they need tanks, artillery or rockets?" he asked.

The prime minister also said the Palestinians must recognize Israel as the national homeland of the Jewish people, thereby relinquishing future Palestinian claims on Israel.

Netanyahu stressed that neither demilitarization nor Palestinian recognition of Israel as a Jewish state were preconditions for restarting talks.

Finance Minister Yuval Steinitz (Likud) said the situation in the Gaza Strip must be factored into negotiations with the Palestinian Authority (PA).

Steinitz said there could be little progress with negotiations on Judea and Samaria (the West Bank) without demilitarization of the Gaza Strip.

Meanwhile, Defense Minister Ehud Barak met with Egyptian officials in Cairo over the weekend for an update on unity talks between Fatah and Hamas.

According to Egyptian sources, U.S. President Barack Obama's speech to the Muslim world two weeks ago in Cairo convinced Egyptian President Hosni Mubarak to push harder for reconciliation between the two rival Palestinian factions, Fatah and Hamas, as essential for progress in peace talks with Israel.